OTS: Thrifts Post 2Q Profit, But 'Problem' Firms Increase

WASHINGTON — U.S. thrifts posted their fourth consecutive quarterly profit in the second quarter even as industry results continued to reflect ongoing economic weakness and high levels of delinquent loans.

The Office of Thrift Supervision said the nation's thrifts reported a $1.49 billion profit for the second quarter, down from $1.72 billion in the first three months of the year, but better than a $94 million loss in the second quarter of 2009.

Despite those gains, a number of indicators suggested financial institutions continue to struggle with the fallout from the financial crisis, problems in the commercial real estate market and stunted economic growth. Notably, the OTS said the percentage of troubled assets held by the industry continues to remain at levels not seen since the savings and loan crisis of the early 1990s.

Additionally, the number of "problem" thrifts — those most at risk of failure — was 54 at the end of the quarter, up from 50 at the end of the first quarter.

"The performance of the industry reflects the state of the overall economy, weakness in the housing and market and the spread of weakness to the commercial real estate market," OTS Acting Director John Bowman said in a statement.

The agency said delinquencies for most loan types, except for residential mortgages and consumer loans, were higher in the second quarter of 2010 than in the corresponding three months of 2009. Troubled assets, those that were at least 90 days past due or repossessed, represented 3.21% of industry assets at the end of the second quarter, an improvement from 3.28% in the first three months of the year.

The percentage of non-residential and construction loans that were at least 90 days past due both grew during the quarter, while the level of non-current residential mortgages remained steady from the first three months of the year at 5.17%.